French Property Mortgages
Can you pack up your bags, step on a plane, and get a mortgage in France? If you want to enjoy the Joie de vivre abroad, you’ll be glad to know it’s certainly possible. But before jetting off, there are a few things to consider. Although getting a mortgage in France is achievable, there are several obstacles that might stand in your way – we’ll help you figure out how to make your dream of living in France a reality.
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French mortgages: what to consider?
The process of buying property in France differs between non-resident buyers and resident buyers, and French mortgage providers will typically ask for a larger down payment from international buyers.
Getting your paperwork reviewed
Before making any mortgage payment, review your paperwork with an expert, translator, lawyer, or broker. They will help you understand everything from planning permissions to finance, so you know exactly what you’re signing – down to every syllable of the document’s small print.
Some French banks require a non-refundable deposit from overseas clients. When you want to purchase property in France, you should have an expert read through your contract with a fine-toothed comb in case you’ve overlooked essential points you don’t necessarily agree with.
Exchange rate fluctuations
A shift in exchange rates can be catastrophic to your monthly repayments, so much so that people can sometimes not afford their mortgage payments. The value of your existing property could fluctuate, potentially leading to a change in the Pound to Euro exchange rate.
If the shift is above 20%, French banks are obliged to inform property owners and offer you the opportunity to pay in a different currency.
To find the best rates, you’ll need the help of a French broker or specialist advisor.
Taxes
You may still have to pay taxes in the UK, even though you own property in France. We recommend speaking with one of our advisors, who can help you understand taxes and interest rates regarding overseas property purchase.
What will mortgage lenders look at before you get a French mortgage?
To receive a good mortgage offer, the lender has to be confident that you can afford the monthly repayments. A French lender determines your eligibility by assessing the following factors:
Checking your affordability
A lender won’t just look at your income but also your outgoings. If your income can cover a mortgage in France, it doesn’t necessarily mean you’ll get one. You’re more likely to be rejected if a high percentage of your income is spent on random purchases.
Essentially, your affordability will tell the lender how much you can afford to borrow from the purchase price.
Credit history
Many people avoid applying for a mortgage because of the illusion that bad credit means a definite rejection. Although having a great credit score will help, it’s not the be-all-and-end-all.
One way to better your chances is to save a huge chunk of the deposit. The more downpayment you can make, the lower the risk and the higher the chances of them trusting you to pay back the mortgage.
At LoanCorp, we can match you with a specialist broker who has experience helping borrowers with bad credit get mortgages in France.
Age
A mortgage lender will look at your age to determine eligibility. Like in most countries, the younger you are in France (providing you’re of legal age), the more likely the lender will accept you for a mortgage loan. A mortgage lender typically wants your mortgage to be fully paid off by age 75.
However, this isn’t to say that the mortgage process is the same with every bank in France. In some instances, you may be accepted if you’re able to put down a larger down payment, you’re happy to pay higher interest rates on your mortgage, or you’re able to provide other forms of investments.
How can you get a French mortgage?
Your first step when buying a property abroad is to speak with a specialist advisor who can direct you down the correct path, which costs less time and money. Once you’ve done this, your dedicated mortgage broker will inform you of all the ways you can obtain a mortgage in France, such as:
Remortgage your UK property
Do you already have an existing mortgage at home in the UK? If the answer is yes, you might want to consider remortgaging that property to help you afford the deposit to your new home in France.
A specialist advisor will ensure you can afford the monthly payments, as once you’ve remortgaged your property in the UK, the new amount will be greater than before.
Remortgage your French property
Maybe you’ve been through the French mortgage process before and would like to remortgage that property so you can purchase a new one. This is certainly possible. At LoanCorp, we can direct you to the best lenders that can offer you irresistible deals better than your last.
Release some of your equity
If you are over fifty-five and own a home, you can release the equity you’ve built through your first mortgage and use it to get a second one. Having property insurance and not renting the property to anyone else are some of the commitments that come with equity release.
Use interest-only mortgages
Luckily, you can find an interest-only mortgage from most lenders in France. However, your offer may vary depending on the French lender you choose.
What type of mortgage can you get in France?
Being such a popular destination for property purchases, it’s no surprise there are a variety of ways for non-resident buyers to get mortgages in France, such as:
Commercial mortgages
A commercial mortgage typically requires a larger deposit but will include better deals and security.
Non-standard property
Some lenders will refuse a mortgage on a property that doesn’t meet the required standards. If the property poses a risk, the lender will more than likely refuse your application.
Buy-to-let
A lot of buyers will get submit a French mortgage application for the purpose of renting the home out to others. Rental income on a buy-to-let property overseas, especially in a bustling holiday destination like France, can be a very profitable business.
It’s important to note that a buy-to-let in France is on an interest rate only, whereby the interest is repaid each month, and then the full amount at the end of the term.
Where should you live in France?
Don’t forget that France’s most popular locations, such as Paris or the balmy south areas, require you to borrow a lot more money than in places considered less attractive (Normandy, for example). First, decide if you want the city or town life, and then if you’d rather population over price.
What else should you consider?
You’ve almost figured out exactly what you need before making the move, but don’t forget to take away our final last words:
Seek legal advice
A lawyer, who doesn’t work for the banks or the seller, will give you honest and objective advice. You’ll want a lawyer on your side who’s had experience in the French market and property law.
Speak with an expert
Everybody has their own necessities that they need fulfilling before moving abroad. To save time and money, we’ll always recommend speaking with an expert who can lead you down the right direction without turnarounds.
Search for the best French mortgage rates
If you’d like a UK bank to help with your mortgage in France, why not use one of these international banks:
FAQs
Are the deposits for French mortgages expensive?
A minimum of 15% is required as a deposit if you want a mortgage in France. But you may have to pay more if you’re applying with an international bank and lander, where the deposit in France could go as high as 80% loan-to-value.
Some providers in France only allow non-residents to borrow 50% loan-to-value, although, with the help of an expert finding you the right lender, you can borrow up to 80% with a French mortgage provider.
Why is the French mortgage market so popular with investors?
Most lenders in France offer longer fixed-rate mortgages than in the UK. That means non-resident buyers will know the exact purchase price of the mortgage up until the final monthly payments have been made.
Not only does this benefit the French property market but also international buyers who can have up to 25 years to pay off their mortgage with complete awareness of their finance.
Should I use a mortgage broker?
French mortgage brokers know how to make your application attractive enough that a lender will consider you. Unfortunately, a French lender can be ruthless, and you are more likely to be rejected if you work without a broker.
We’ll always recommend using a broker who can help your application meet the lender’s standards so contact us now to get started free of charge.